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The Autumn Budget has landed, and if you’re thinking about leasing a car in the coming years, there’s quite a bit to know. Don’t worry, though; we’ve broken down all the changes so you can understand exactly what it means for your lease. And we’ve got some good news mixed in with the technicalities, so stick with us.
Pay-Per-Mile Tax for Electric Vehicles (From 2028)
Right, let’s start with the headline that’s got everyone talking. From April 2028, electric vehicles are going to be charged based on how many miles you drive. It’s called the Electric Vehicle Excise Duty (eVED), and here’s how it works: you’ll pay 3p per mile for an EV and 1.5p per mile for a plug-in hybrid.
Before you panic, let’s put this into perspective. If you’re driving around 8,000 miles a year, which is pretty average, you’re looking at roughly £240 annually for an electric car. Compare that to what petrol drivers pay in fuel duty, and you’ll see that EVs are still getting a decent deal overall.
If you lease an EV between now and 2028, you’ve got a real window of opportunity. A typical 2-4 year lease contract will likely finish before the eVED kicks in, meaning you’ll avoid the pay-per-mile charges altogether. If you’ve been thinking about going electric, the next couple of years are genuinely the sweet spot to make your move.
Road Tax Changes: The Good News for Electric Cars
From 1st April 2025, electric vehicles lost their free road tax status. New EVs now pay £10 in their first year, then £195 annually after that. It’s a change, but it’s relatively modest when you look at what petrol and diesel drivers are paying.
The government increased the Expensive Car Supplement threshold for zero-emission vehicles from £40,000 to £50,000, and it takes effect from 1 April 2026. What does that mean? Well, that Expensive Car Supplement used to add an extra £425 per year to vehicles over £40,000. Now it only applies to EVs over £50,000.
This is actually pretty significant. Popular family EVs like the Tesla Model 3, Nissan Leaf, and Hyundai Ioniq 5 are now caught below the threshold. According to Autotrader, this change removes 51% of all new electric cars from the tax entirely, up from 37% before. In real money? If you’re leasing one of these models on a three-year deal, you’re looking at savings of around £3,000. That’s genuinely worth knowing about.
Salary Sacrifice Electric Car Schemes
If your employer offers a salary sacrifice car scheme for electric vehicles, absolutely nothing has changed. These schemes remain completely unlimited with no caps whatsoever. You get full income tax relief, full National Insurance relief, and the BiK tax rate stays at just 3% for 2025 to 26.
Salary sacrifice car schemes for electric cars remain one of the best employee benefits available, seriously. Employees can achieve savings of 20 to 50% compared to buying privately, which is hard to beat. If your employer hasn’t mentioned this, it might be worth having a quiet word with HR. You could be missing out.
Company Car Schemes: What’s Changed and What Hasn’t
For company car users, the news is fairly stable. The benefit-in-kind tax rates for company cars haven’t changed. The government stuck with the rates announced back in October 2024. So if you’ve got a company motor, your tax bill is staying put for now.
There is one specific bit worth knowing if you drive a plug-in hybrid, though. From 1st January 2025 to 5th April 2028, PHEVs will have their BiK tax calculated using a nominal CO2 figure of 1g/km rather than their actual emissions. This prevents the tax bill from jumping up due to new Euro 6e bis emission standards. It’s not a huge deal for most people, but if you drive a plug-in hybrid, it’s worth noting.
Employee Car Ownership Schemes
The government had originally planned to bring Employee Car Ownership Schemes (ECOS) under Benefit in Kind rules from October 2026, which would’ve effectively taxed them like company cars. That was going to be a headache for businesses.
Well, after pressure from the industry, the government has delayed these changes until April 2030, with transitional arrangements extending until April 2032. If you’ve got ECOS arrangements in place, they’ll continue to operate under current rules as long as you don’t vary or renew your agreements before that date. This gives businesses a proper window to plan ahead.
Leasing Companies and Capital Allowances
If you’re leasing a vehicle through a business, there’s a technical change worth knowing about. The writing-down allowance, the amount of corporation tax relief leasing companies get, is being reduced from 18% to 14%, effective from 1st April 2026. This increases the cost basis for leasing companies acquiring vehicles, which could feed through into slightly higher lease prices over time.
However, there’s a silver lining. The government introduced a new 40% first-year allowance for leasing companies from 1st January 2026, which provides some compensation. This applies to a broader range of assets than previously available, including leased vehicles, and importantly, extends to unincorporated businesses and partnerships.
Fuel Duty: The Freeze Continues For Now
The 5p per litre cut in fuel duty that was introduced back in 2022 is being extended to the end of August 2026. However, from September 2026, the freeze begins to unwind. Rates will gradually increase to pre-2022 levels by March 2027, and from April 2027 onwards, fuel duty will increase in line with the Retail Price Index.
So the current relief is temporary, and diesel and petrol drivers should expect higher costs further down the line. This is another reason why considering an electric lease could be worth it. At least you’ll dodge these fuel duty increases.
Changes to Motability
If you use the Motability scheme to lease a vehicle, there are some changes coming that you should be aware of. From 1st July 2026, the scheme will lose some tax advantages that previously made it more affordable. Specifically, VAT at 20% will now apply to top-up payments for customers leasing higher-value vehicles, and Insurance Premium Tax exemptions are being removed.
Additionally, luxury brands including Audi, BMW, and Mercedes have been removed from the scheme immediately. The scheme is shifting towards more British-built vehicles like Nissan, Mini, and Toyota. Motability Operations estimates that these tax changes will increase the average advance payment (upfront cost) by approximately £400 over a three-year lease.
Whilst there will still be vehicles available with no upfront payment, the scheme is becoming less generous for those opting for premium vehicles.
Charging Infrastructure
To balance out the new taxation on electric vehicles, the government hasn’t left things entirely in the lurch. They’ve committed £100 million for EV charging infrastructure, including support for home and workplace installations, plus another £100 million for local authorities to accelerate public charge point rollout. Additionally, 100% business rates relief will apply for 10 years for eligible EV charging points and EV-only forecourts.
The electric car grant scheme has also been extended through to 2029–30 with an extra £1.3 billion in funding, maintaining the current support structure of £1,500 or £3,750 discounts on eligible models. So whilst there are new taxes coming, the government is still backing electric cars quite heavily.
To Sum Up
The Autumn Budget is a mixed bag, but if you’re thinking about leasing your next car, there are some genuine opportunities to grab. The window for leasing an electric vehicle before the eVED kicks in from 2028 is closing, so if that’s something you’re considering, now really is the time. The increased ECS threshold means popular family EVs are going to be cheaper to lease on salary sacrifice schemes, and if your employer offers that benefit, you’re sitting pretty.
For petrol and diesel drivers, the fuel duty freeze provides temporary relief, though that won’t last forever. And for business owners with ECOS arrangements, that extra breathing room until 2030 is genuinely valuable.
If you’ve been debating taking out a lease, particularly for an electric vehicle, the next 18 months to two years are shaping up to be genuinely attractive. Head over to cars2buy, compare the latest lease deals, and see what’s available. With hundreds of lease offers from trusted dealerships all in one place, you can compare personal and business lease options side by side and find the perfect match for your needs. You might be surprised at what you find, and you could be driving behind the wheel of a brand new model sooner than you think.